Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence

39 Pages Posted: 1 Aug 2006

See all articles by Marcel Neutel

Marcel Neutel

University of Groningen

Almas Heshmati

Sogang University; Jönköping International Business School

Date Written: July 2006

Abstract

In this research, the relationship between globalisation and poverty and income inequality is determined. A whole new globalisation index has been constructed based on data covering a large sample of 65 developing countries. The index is based on the globalisation index proposed by A.T. Kearney/Foreign Policy Magazine. The index is composed of four subindices, namely: economic integration, personal contacts, technological connections and political engagement. Results from cross-sectional regression analysis show that there is a significant relationship between globalisation and poverty and income inequality. Globalisation leads to poverty reduction and it reduces income inequality. The relationship between globalisation and poverty remains significant when controlled for regional heterogeneity. A non-linear analysis shows that poverty has diminishing returns to benefits from globalisation.

Keywords: globalisation, poverty, inequality, indices

JEL Classification: C43, F15, O57

Suggested Citation

Neutel, Marcel and Heshmati, Almas, Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence (July 2006). IZA Discussion Paper No. 2223. Available at SSRN: https://ssrn.com/abstract=921391

Marcel Neutel

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Almas Heshmati (Contact Author)

Sogang University ( email )

Seoul 121-742
Korea, Republic of (South Korea)
0082-2-705-8771 (Phone)

HOME PAGE: http://www.sogang.ac.kr/english/academic/03_under_0123.html

Jönköping International Business School ( email )

Jönköping, 551 11
Sweden

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